The Dubai Roads & Transport Authority (RTA) has won the second place award in the GCC e-Government Award 2009 held recently in the Omani capital Muscat, for the category of the best electronically advanced organization (E-Maturity Class) at the GCC level following a fierce competition with several GCC Ministries and organizations. Submissions to the Awards were assessed by an international panel comprising members from several countries worldwide.

The Award was collected on behalf of the RTA by Ahmed Hashim Bahrouzyan, CEO of RTA Licensing Agency, in a ceremony held in the presence of H.E. Ahmed Abdul Nabi Makki, Minister of National Economy, Deputy Chairman of the Financial Affairs and Energy Resources Council, and in charge of the Ministry of Finance in the Sultanate of Oman.

H.E. Mattar Al Tayer, Chairman of the Board and Executive Director of the RTA, expressed his delight to see another accolade added to the impressive record of achievements made by the RTA glittering with vital projects and strategic initiatives capable of boosting the profile of the UAE in general and Dubai Emirate in particular at the regional and GCC levels, and giving an incentive for others to recharge their efforts towards optimum utilization of the existing projects.

Al Tayer made these remarks while receiving the Award from RTA IT Team headed by the CEO of RTA Licensing Agency Ahmed Hashim Bahrouzyan, the CEO of Corporate Technical Support Services Sector Abdullah Al Madani, IT Dep’t Director Abdullah Al Bastaki, and e-Government Manager Abdullah Al Ashqer.

“RTA has developed an integrated strategy for shifting the services rendered to customers to online platforms in keeping with the vision and drive of the e-Government in a strategy based on prompt delivery, customer centricity. This was coordinated with the e-Government in the context of showcasing RTA e-services and applying the standards and criteria of Dubai e-Government such as eServices Quality Framework. Observations made by Dubai e-Government and incorporated in e-Services Quality Assessment Report about the design and contents have been taken on board” said Al Tayer.

“The total number of e-services offered by the RTA has reached 164 services (procedural and informational) representing all services rendered online, achieving a 100% switch of the total e-services in spanning all the services agreed to in advance with Dubai e-Government. The initiatives and activities undertaken by the RTA in the field of e-services have contributed to facilitating customer service procedures. For instance two e-services related to driving licenses and vehicle registration cards have been launched online with a view to adding new and diverse channels for processing transactions without having to visit the service location.

“RTA is always keen on delivering the best-in-class e-services to mass transit system users among which is Nol Card; which is one the electronically sophisticated systems across the world offering the best and easiest service to the users of various transport systems spanning Dubai Metro, public buses, water bus and paid parking machines. The number of cards sold since the Nol card had been rolled out on 22 August 2009 up to 22 December 2009 reached 1,041,000 cards. RTA has also introduced Wojhati (Journey Planner) and Dubai Emirate has become only the fifth city worldwide to apply the system after London, New York, Munich and Melbourne.

The system provides full details required by mass transit mode users, and uploads public transport information (public buses, metro and water taxi) on Google Maps; thus Dubai has become the first city in the Middle East and North Africa regions to add its public transport data to Google Maps and introduce the mParking service, enabling customers to pay their parking fees through the mobile phone without having to go to the parking machine or carry coins.

It is worth-mentioning that GCC e-Government Award has been set up by a decision from the GCC General Secretariat with the aim of creating competitiveness among various GCC Ministries and various government entities and enhancing the e-government of the region.

Contracts for the GCC rail project are expected to be awarded in December this year while the $15.5 billion (Dh56.93bn) project is set to be fully operational by as early as 2016, a senior official said.

Dubai metro

The regional railway, according to Dr Ramiz Al Assar, Senior Chief Representative, GCC Secretariat General, and senior transport specialist at the World Bank, was declared commercially and financially feasible by all the member states last month.

The project is now in the implementation phase. The GCC Secretary General office is now long listing consulting firms for the detailed engineering design and is expected to finalise the request for proposal and terms of reference next month.

Thereafter the secretariat would short-list consulting firms in November and award the contracts in December.

“We plan to award the contracts at the end of this year or very early next year,” Al Assar told Emirates Business on the sidelines of the Rail Infrastructure Middle East 2010. “We will go through the international competitive bidding process, long list consulting firms, then do some prequalification and short listing. The dates are tentative but we hope to award in the shortest period.”

The GCC Secretariat General office will also study the formation of a GCC railway authority and is planning to award contracts related to this in July.

“With regard to the formation of the GCC railway authority, the Secretariat General has completed the feasibility the study and we expect to conclude this within six to eight months and we hope that it would be endorsed at the next 31st GCC summit in Abu Dhabi in December,” Al Assar said.

Ibrahim Al Sabti, Director of Transportation Department at GCC, said the secretariat is looking at awarding the contract to one or two companies. “We will try our best to select the best consulting firm to do the detailed engineering design,” he said. “We have done the economical and financial study and now we’ll go to phase two, which is preparing the detailed engineering design. Probably it could be one company where they will form a joint venture or some type of consortium, but probably it will be one or two.”

Al Assar said the project is “too big” to be awarded to one consultant or one contractor. “It is important to look how to integrate several consultants working in the member states during the design and also when the project goes into construction,” he added.

Construction costs

Al Assar said each member state will pay the capital cost based on the length of the railway in that country.

The rail has a total length of 2,177km with Saudi Arabia (695km) and the UAE (684) having the longest lines. The costs that the kingdom and the Emirates are expected to bear are $3.8bn and $4.4bn, respectively. Oman with 306km will shoulder $2.8bn, Bahrain with 64km will bear $2.7bn and Kuwait with 145km will shoulder $1bn.

Currently, commitments of more than $7bn, or 1,274km, have been made, therefore the amount that would have to be raised by the GCC national railways will only be in the range of $8.3bn.

“There’s about 1,300km of GCC railway already committed, and that will further strengthen the implementation,” Al Assar said. “These countries will do this 1,300km whether there’s a GCC link or not, so you only have an additional link of about 1,000km and that translates to about $10bn.”

Only 903km will have to be added to the existing or planned projects, equating to $8.3bn capital cost – Saudi Arabia with 515km ($3.4bn), Bahrain with 64km ($2.7bn), Kuwait with 145km ($1bn), Oman with 80km ($700 million), Qatar with 83km ($300m) and the UAE with 16km ($200m).

“These mega transport projects are never financially viable in a sense of returning money to the government,” Al Assar said. “They are public service offerings, which means this will be subsidised. The governments will pay the initial capital infrastructure cost and maybe even buy the rolling stock like in the case of North South railway.”

Al Sabti said: “You start the project even if it is not feasible, but economically it is because you reduce pollution, road accidents, road maintenance and all these make the investment worth it. At the beginning, yes, there will be subsidy, probably in the first six or seven years.”

Private sector

The private sector will only have a role to play once the project is commissioned.

“The final form of the project will be in the shape of concession to the private sector. It is financially feasible for them to come and invest. We are hoping that international firms will invest in our area… this will happen probably by the end of 2016,” Al Sabti said.

“The concession is for operations and maintenance,” Al Assar said. “Maybe there will not be an ongoing or continuing annual subsidy or it will be on a decreasing basis that eventually the government will give you the infrastructure and you operate and maintain it as a stand alone.”

But the area in which the private sector can participate can still be broadened, Al Assar said. “We’re still discussing how the private sector can participate,” he said. “Although a decision has been made to move the detailed engineering and design there’s still room to be able to manoeuvre or explore options for the private sector.”

Speed upgrade

The GCC Secretariat General office is looking at upgrading the speed of the railway project to 350km from the currently planned 200km per hour.

The decision, which is expected to be taken by the end of this year, will increase the cost estimates of the project to $25.6bn, or 65 per cent higher than the current estimates. The faster train will not only be more expensive in terms of capital cost it will also be more costly in terms of operational cost as it will be run on electricity.

Power, generated usually by gas, is deemed more expensive due to shortage of sources. Qatar is the only gas-rich country in the six-country group and most of its supplies are locked up by a moratorium study.

A number of states such as Saudi Arabia, Kuwait and some emirates in the UAE are already experiencing power shortages due to a dearth of gas contracts.

“The project is currently estimated at $15.5bn if we use diesel. But if we plan to go for electricity it will cost us more than $25bn,” Al Sabti said.

“It is an option we are currently looking at and hopefully the decision will come this year. The implementation will take a while,” Al Assar said.

When deemed feasible by the member states, the study will go through their respective ministries of transport and finance before it lands with the joint ministerial committee between the ministries of finance and foreign affairs. Once approved, it will go to the GCC summit.

“When you talk about the cycle at least one year is required to evolve,” Al Assar said. “The money to be spent on upgrading the speed is actually an opportunity cost, which you can spend on other sectors such as education and healthcare.”

The 200km per hour train will be pushed through while the upgrade may be taken in the mid or long term once the passenger volume picks up, he said.

“In my opinion, in the short term the 350km per hour proposal may not happen unless it becomes a political decision,” Al Assar said.

“The decision to go for 200km per hour is an educated decision based on thorough feasibility. It is not an arbitrary study because of politics. It is based on forecast volume while the 350km per hour proposal only has to do with the passenger traffic and it can only be implemented when the heads of the member states see some benefit or potential for having that,” he added.

National railways

Contracts regarding the Dh16 billion Emirates railway project are expected to be awarded by the end of this year, a senior official said.

“I would say by the end of this year you are going to see the awards in the market,” said Bassam Mansour, expert Trains and Railway Systems, UAE National Transport Authority. “Most of the UAE railway is part of the GCC railway section,” he said. “Majority of the works are within the UAE, accommodating all the interconnection in Abu Dhabi and the Northern Emirates.”

Mansour said operations will start in 2016. World Bank estimates the UAE will contribute 31 per cent of the total length and 28 per cent of the total cost of the GCC rail project.

“We are trying to develop the UAE railway regulations and standards,” said Mansour.

Meanwhile, other GCC countries are also planning rail projects. Oman has appointed consultants to conduct a feasibility study of a 200km railway network that will begin in Sohar and extend to Duqum.

Kuwait has put forth plans of a $132bn model city, which will include a railway system, with an investment of more than $11bn.

Qatar will also see a series of railway projects over the next 10 years. Qatari Diar Real Estate Investment Company, in partnership with Germany’s Deutsche Bahn, has developed a conceptual railway design.

The Dubai Roads & Transport Authority (RTA) has won the second place award in the GCC e-Government Award 2009 held recently in the Omani capital Muscat, for the category of the best electronically advanced organization (E-Maturity Class) at the GCC level following a fierce competition with several GCC Ministries and organizations.

Submissions to the Awards were assessed by an international panel comprising members from several countries worldwide.

The Award was collected on behalf of the RTA by Ahmed Hashim Bahrouzyan, CEO of RTA Licensing Agency, in a ceremony held in the presence of H.E. Ahmed Abdul Nabi Makki, Minister of National Economy, Deputy Chairman of the Financial Affairs and Energy Resources Council, and in charge of the Ministry of Finance in the Sultanate of Oman.

H.E. Mattar Al Tayer, Chairman of the Board and Executive Director of the RTA, expressed his delight to see another accolade added to the impressive record of achievements made by the RTA glittering with vital projects and strategic initiatives capable of boosting the profile of the UAE in general and Dubai Emirate in particular at the regional and GCC levels, and giving an incentive for others to recharge their efforts towards optimum utilization of the existing projects.

Al Tayer made these remarks while receiving the Award from RTA IT Team headed by the CEO of RTA Licensing Agency Ahmed Hashim Bahrouzyan, the CEO of Corporate Technical Support Services Sector Abdullah Al Madani, IT Dep’t Director Abdullah Al Bastaki, and e-Government Manager Abdullah Al Ashqer.

“RTA has developed an integrated strategy for shifting the services rendered to customers to online platforms in keeping with the vision and drive of the e-Government in a strategy based on prompt delivery, customer centricity. This was coordinated with the e-Government in the context of showcasing RTA e-services and applying the standards and criteria of Dubai e-Government such as eServices Quality Framework.

Observations made by Dubai e-Government and incorporated in e-Services Quality Assessment Report about the design and contents have been taken on board” said Al Tayer.

“The total number of e-services offered by the RTA has reached 164 services (procedural and informational) representing all services rendered online, achieving a 100% switch of the total e-services in spanning all the services agreed to in advance with Dubai e-Government.

The initiatives and activities undertaken by the RTA in the field of e-services have contributed to facilitating customer service procedures. For instance two e-services related to driving licenses and vehicle registration cards have been launched online with a view to adding new and diverse channels for processing transactions without having to visit the service location.

“RTA is always keen on delivering the best-in-class e-services to mass transit system users among which is Nol Card; which is one the electronically sophisticated systems across the world offering the best and easiest service to the users of various transport systems spanning Dubai Metro, public buses, water bus and paid parking machines.

The number of cards sold since the Nol card had been rolled out on 22 August 2009 up to 22 December 2009 reached 1,041,000 cards. RTA has also introduced Wojhati (Journey Planner) and Dubai Emirate has become only the fifth city worldwide to apply the system after London, New York, Munich and Melbourne.

The system provides full details required by mass transit mode users, and uploads public transport information (public buses, metro and water taxi) on Google Maps; thus Dubai has become the first city in the Middle East and North Africa regions to add its public transport data to Google Maps and introduce the mParking service, enabling customers to pay their parking fees through the mobile phone without having to go to the parking machine or carry coins.

It is worth-mentioning that GCC e-Government Award has been set up by a decision from the GCC General Secretariat with the aim of creating competitiveness among various GCC Ministries and various government entities and enhancing the e-government of the region.

Infrastructure projects such as ports, power plants or roads and bridges are mushrooming in the 6 countries of the Gulf Cooperation Council as they deal with rapidly growing populations and their ambitions to link Europe and East Asia economically.

The integration of individual projects and providing alternative means of financing will be hot topics from 2010 onwards.

Mr Frank Beckers MD of project and capital advisory Middle East, Africa and Asia at Deutsche Bank in Dubai said that the global financial crisis has not kept the GCC away from moving ahead with its infrastructure projects. Delays due to the global recession in 2009 were overall minor. The GCC’s total population is nearing 40 million people, with population growth averaging 3.4% during the last 4 years.

According to the IMF, total GCC medium term project investment stood at USD 2,193 billion in 2009. Of this 44% are real estate projects while infrastructure, oil and gas each account for 19%. In the country breakdown The UAE and Saudi Arabia lead in the GCC with 41.8% and 28.8% of investment respectively.

Dr Nasser Saidi chief economist of the DIFC Authority in Dubai said that the next step will be to integrate these projects. Dubai has some 18 plus free zones covering most industrial sectors, but most of the zones became isolated clusters and are barely linked to the emirate’s public transport network. The start of the 52.1 kilometer long Dubai Metro on September 9th 2009 was a first step in integrating the free zones and providing low carbon means of transportation.

Beside staples such as hospitals, pipelines, public transport systems or schools, the UAE has also set up an Energy and Environment Park in Dubai and the zero carbon city Masdar clusters in order to produce clean electricity, create efficient waste energy schemes and to attract alternative energy producers from abroad.

Mr Adil Marghub manager of infrastructure and energy for the International Finance Corporation said that the green shoots of innovation have to become a real market in regards to technology, delivery and financing.

According to Mr Marghub, the high use of water is one of the main obstacles the GCC faces when transforming itself from a primarily carbon energy producing region to a diversified economic block. The Middle East and North Africa is the only region in the world where withdrawals exceed renewable resources with a whopping annual withdrawal of 121% of existing resources.

Deutsche Bank’s Mr Frank Becker said that financing environmentally friendly projects, however, is not the burden. The liquidity is there.

The Middle East uses project finance as a dominant funding strategy for infrastructure projects. Some 57% of the USD 396 billion Middle Eastern projects completed between 2006 and 2009 were financed with loans and bonds compared to 5% globally. Qatar, for example, can finance its recently announced USD 25 billion railway project of which Germany’s railway monopolist Deutsche Bahn AG holds 49% stake, alone.

Mr Becker said that but in 2009, the GCC states started to transform their financing risks by tapping new means of fund sources. Among these are Public Private Partnerships, Islamic Bonds and Private Equity funds.

He said that “In 2009, the issuance of USD 750 million Eurobond for Abu Dhabi based Dolphin Energy and the USD 530 million additional Islamic financing of Qatargas II demonstrated that there is a market for the non loan segment.”

Infrastructure projects such as ports, power plants or roads and bridges are mushrooming in the six countries of the Gulf Cooperation Council as they deal with rapidly growing populations and their ambitions to link Europe and East Asia economically. The integration of individual projects and providing alternative means of financing will be hot topics from 2010 onwards.

Approximately 57% of the $396bn Middle Eastern projects between 2006 and 2009 were financed with loans

The global financial crisis has not kept the GCC away from moving ahead with its infrastructure projects. “Delays due to the global recession in 2009 were overall minor”, says Frank Beckers, Managing Director of Project and Capital Advisory Middle East, Africa and Asia at Deutsche Bank in Dubai. The GCC‘s total population is nearing 40 million people, with population growth averaging 3.4% during the last four years.

According to the IMF, total GCC medium-term project investment stood at $2,193bn in 2009. Of this 44% are real estate projects while infrastructure, oil and gas each account for 19%. In the country breakdown The UAE and Saudi Arabia lead in the GCC with 41.8% and 28.8% of investment respectively.

“The next step will be to integrate these projects”, says Dr. Nasser Saidi, Chief Economist of the DIFC Authority in Dubai. Dubai has some 18 plus free zones covering most industrial sectors, but most of the zones became isolated clusters and are barely linked to the emirate’s public transport network. The start of the 52.1 kilometre long Dubai Metro on September 9 2009 was a first step in integrating the free zones and providing low-carbon means of transportation.

Beside staples such as hospitals, pipelines, public transport systems or schools, the UAE has also set up an Energy and Environment Park in Dubai and the zero-carbon-city Masdar clusters (both under construction) in order to produce clean electricity, create efficient waste energy schemes and to attract alternative energy producers from abroad.

Green technology financing

“The green shoots of innovation have to become a real market in regards to technology, delivery and financing”, Adil Marghub, Manager of Infrastructure and Energy for the International Finance Corporation, the investment arm of the World Bank, explains.

According to Marghub, the high use of water is one of the main obstacles the GCC faces when transforming itself from a primarily carbon energy producing region to a diversified economic block. The Middle East and North Africa is the only region in the world where withdrawals exceed renewable resources with a whopping annual withdrawal of 121% of existing resources (compared to around 5% in Europe and Central Asia).

Financing environmentally friendly projects, however, is not the burden. “The liquidity is there”, says Deutsche Bank’s Frank Beckers. “The Middle East uses project finance as a dominant funding strategy for infrastructure projects. Some 57% of the $396bn Middle Eastern projects completed between 2006 and 2009 were financed with loans and bonds compared to 5% globally.” Qatar, for example, can finance its recently announced $25bn railway project, of which Germany’s railway monopolist Deutsche Bahn AG holds 49% stake, alone.

“But in 2009, the GCC states started to transform their financing risks by tapping new means of fund sources”, Beckers explains. Among these are Public Private Partnerships, Islamic Bonds (Sukuk) and Private Equity funds. Frank Beckers: “In 2009, the issuance of a $750m Eurobond for Abu Dhabi-based Dolphin Energy and the $530m additional Islamic financing of Qatargas II demonstrated that there is a market for the non-loan segment.”

Recent developments are encouraging. Adil Marghub: “On November 3 IFC issued a $100m five-year Sukuk and listed it on the Nasdaq Dubai and the Bahrain Stock Exchange. We are keen on developing a Sukuk market in the Middle East, where our annual investment portfolio is about $4bn”.

With the recent launch of the Dubai Metro and plans to set up Abu Dhabi and Etihad trains, the UAE and the rest of the Gulf region have stepped into a new unique era of development that signals their determination to develop their basic infrastructures and sustain their current economic growth rates.

Dubai

Before the Metro became operational, rail transport – the cheapest way to travel – was not part of the Gulf Cooperation Council’s (GCC) infrastructure development plans. The only rail project the region foresaw was the link between Dammam and Riyadh in Saudi Arabia.

However, the Metro and the Etihad Train represent a high-tech, fully automated rapid transit system in the Gulf region where the Metro is considered one of the most advanced urban rail systems in the world.

The Metro has become operational and will be followed by two projects -the Abu Dhabi train and the $7 billion (Dh25.7 billion) Etihad Train – which will link the country’s cities, ports and airports within an integrated rail network in a few years to come.

These developments are likely to push GCC countries into rapidly embarking on rail networks to create regional links. The GCC rail network has become a highly important issue for the six Gulf nations in their quest to develop infrastructure.

What makes one wonder about the UAE’s three rail projects is the speed of decision-making and implementation of the projects, particularly in the light of the scale of these projects.

Although these projects were approved in the wake of a deep global financial downturn, the implementation process was carried out as planned in line with specified time frames.

This has helped to clear obscurity and ambiguity over the UAE’s financial and economic situation as speculated upon by some foreign media outlets.

On the other side, there is no positive sign about the proposed GCC rail project that is supposed to link all GCC states from Kuwait to Muscat via Saudi Arabia, Bahrain, Qatar and the UAE. So whether this project will even take off remains questionable given that it was announced 10 years ago.

Lately, it has been revealed that the primary designs of the project are about to be signed but there are obstacles and different viewpoints about the ways and sources of finance. The project cost is estimated at $25 billion (Dh91.95 billion), and is set to be completed by 2017.

Through a quick review of the details announced by the GCC’s General Secretariat, it seems that things are not going as planned. There is confusion over each country’s contribution to the project according to its geographic area.

Basically, this is a financial issue related to a vital project that is important for all GCC countries. Thus contribution rates must be specified according to financial criteria.

Therefore, the GCC’s General Secretariat needs to define its financial criteria as a framework for the successful implementation of the rail system.

Under the criteria, each Gulf state will contribute to setting up the GCC rail system according to its contribution rate to the Gross Domestic Product (GDP) of all GCC countries.

For example, if the total GDP of GCC countries is estimated at $1 trillion and a Gulf country’s GDP is $100 billion, then that country’s contribution rate would be 10 per cent.

This simply means that the country whose contribution to the GCC’s total GDP is 10 per cent would be required to contribute $3 billion to the $30 billion rail project. The same applies to all GCC members.

I believe such calculations are fair enough for all GCC countries because each country will benefit from this project according to the size of its economy. For instance, Qatar’s GDP is twice that of Oman, whose area is 26 times the area of Qatar.

In addition, while the Metro and the proposed Abu Dhabi train are operated by electric power and equipped with advanced systems, the planned GCC railway is designed to be run on diesel – one of the most dangerous sources of environmental pollution.

This requires GCC countries to consider issues relating to the environment, modernity and technology while addressing the implementation of the GCC train project.

They can benefit from the experiences of the Metro and the Etihad Train in terms of primary studies and the speed of implementing the project.

Dr Mohammad Al Asoomi is a UAE-based economic expert.